How to systematically influence the contract value of construction projects to your advantage
- The tendered contract value of a construction project is rarely set in stone.
- Those who bid as early as possible can influence project planning.
- Both the client and the supplier benefit from this.
Your role before the sale: The consulting expert
Even experienced decision-makers in the construction industry often lack detailed product-related knowledge. This is exactly the moment when you enter the arena – not just as a salesperson, but as a consulting expert in your special field. Because hardly anyone in your industry knows as much as you do! You convince with your expert knowledge. Your product may be more expensive in the first comparison, but it will fit the characteristics of the planned building better.
To achieve this goal, however, you need to know as early as possible about all the construction projects that really fit your product ideally and at what stage of planning they are in. As soon as you have filtered out enough information to estimate the contract value of the objects, the only thing missing is the knowledge of the right contact person. You can now start the sales process with confidence.
What is the contract value of an object?
Let’s take a quick look at the contract value 1×1: The term “contract value” (or contract volume) describes the cost scope of a construction project. This is estimated by the tendering body before the start of the award procedure. If a certain contract value exceeds the specified threshold, a construction project must be put out to tender on a Europe-wide basis. This threshold value is regulated by European public procurement law. Due to the different VAT rates in the EU member states, thresholds or contract values are always net amounts (without VAT).
Determining the contract value and your average total contract volume
You determine the presumed amount of a contract value on the basis of information about the planned object. You can use the location to draw conclusions regarding the necessary solidity of the building and the products used; you can draw further conclusions regarding the necessary standard of equipment based on the intended use; knowledge of the building owner or the suppliers already contracted also helps you to estimate the contract value. And based on the size of the object, you determine the number of products that may be marketable.
Now it is exciting to get an idea of the total order volume that is possible for you – and whether this is of interest to you at all. To do this, you determine the average value in relation to the comparable projects you have equipped to date. To do this, you add up all values and divide them by the number of values. Now compare the result with the contract value you estimated for the current tender.
Influence the contract value
You can change the number that is now in black and white in front of you with your targeted strategic investment. To do this, you use the information you have collected. New technologies already help you to automatically detect construction projects as early as possible and also take over the time-consuming project research with the help of Machine Learning. This rapid response is an essential requirement for influencing the order value in your favour – and thus increasing your overall sales volume.
You can actively influence and increase the order value via these 6 key factors
- Construction phase
- Construction project location
- Type of construction project
- Sales volume
- Contact person
- Construction phase:
With information on the current construction phase or work phase of a project, you can assess whether it is currently of interest within your sales strategy. If the project is only relevant for you at a later date, the earliest possible information on changes in the construction phase is elementary. The earlier the construction phase, the greater the likelihood that you can still influence the value of the contract.
- Construction project location:
Information about the location of the construction project allows you to draw conclusions about the necessary development standard of the building. Factors such as climate, probability of earthquakes, locally applicable building laws or even cultural conditions play a greater role in building planning than many people think. These points serve as argumentation approaches that can influence the contract value in your favour. In addition to the actual location of the building, the origin of the parties involved in the project (e.g. architect, planner, tenant) also plays a role. This is because large construction projects are often developed by international teams. Depending on the countries from which the companies involved come, a call may still be of interest to you. And this even though the actual project is not in your target market.
- Type of construction project:
The information about the required type of construction also allows many useful conclusions to be drawn. For example, the materials or the interior design of an office building differ considerably from that of a residential building or hospital.
Show your potential customers personally how relevant and useful your product is for them. Score points with technical and detailed knowledge. All of the above in combination with other such as environmental standards of the building (e.g. LEED certificate) and future tenants (e.g. a luxury boutique) will help to identify the right product for the potential customer.
- Sales volume:
To quantify sales opportunities, for example, helps an elevator company to answer these questions:
- Building height: How many floors must an elevator serve?
- Building size, floor space: How many elevators are required?
- Building type: What type of elevator do we need (e.g. passenger elevator, freight elevator, high-capacity elevator)?
Experience will help you to estimate the required quantity. If you do not intentionally set the estimated value too high, the customer will be happy to remember you for future projects.
- Contact person:
A call to the wrong person will only cost the valuable time of everyone involved. Pre-researched information on all companies involved, including contact details, will save you this otherwise lost time.
In sales, architects are often your most important contact person. Here you can find out how to position yourself as an expert and become the first choice of architects.
Detailed information makes the sales process much more efficient
These 6 key factors will immensely increase your sales opportunities and help you increase your overall sales volume. Our experience shows that once data quality and, above all, data timeliness are maximized, the success rate of our clients’ sales teams changes fundamentally. New technologies, such as Building Radar, help you achieve an unprecedented dimension of efficiency by allowing you to filter projects tailored to your needs, with the ease of real-time results directly to your mailbox.
We wish you the best of luck with your new sales approach!